PC Tel (PCTI) 8-K PCTEL Reports $23.3 Million in Fourth Quarter Revenue

EXHIBIT 99.1

 

PCTEL Reports $23.3 Million in Fourth Quarter Revenue

$91.4 Million for the Full Year

BLOOMINGDALE, Ill. – March 15, 2018 – PCTEL, Inc. (Nasdaq: PCTI), a leader in Performance Critical TELecom solutions, announced its results for the fourth quarter and the full year ended December 31, 2017.

Highlights from Continuing Operations

• Revenue of $23.3 million in the quarter and $91.4 million for the year, down 1% in the quarter and up 8% for the year compared to last year. Connected Solutions revenue was down 9% in the quarter and up 4% for the year. RF Solutions was up 25% in the quarter and up 19% for the year.

• Gross profit margin of 44.0% in the quarter and 42.4% for the year, up 265 basis pointsin the quarter and up 200 basis points for the year compared to last year.

• Net income per diluted share of $0.19 in the fourth quarter and $0.24 for the year, an improvement of $0.47 per share in the quarter and $1.03 per share in the year. Approximately $0.03 per share of the improvement in the quarter and $0.13 per share in the year are attributed to improved operating results. The remainder is a result of non-cash changes in the Company’s deferred tax assets and related valuation allowance.

• Non-GAAP net income and adjusted EBITDA are measures the company uses to reflect the results of its core earnings. A reconciliation of those non-GAAP measures to our financial statements is provided later in the press release.

• Non-GAAP net income per diluted share of $0.08 in the fourth quarter and $0.28 for the year, unchanged in the quarter and up $0.07 for the year compared to last year.

• Adjusted EBITDA margin as a percent of revenue of 10% in the fourth quarter and 9% for the year, up 55 basis points in the quarter and 95 basis points for the year compared to last year.

• $38.1 million of cash and short-term investments and no debt at December 31, 2017. The Company generated free cash flow (cash flow from operations less capital spending) from continuing operations of approximately $2.1 million in the quarter and $7.1 million for the year.

“We are pleased to see revenue growth in both segments. Fleet and utilities markets continue to lead the growth in antennas and we closed several large scanning receiver deals through our OEM partners in the quarter,” said David Neumann, PCTEL’s CEO. “PCTEL is well positioned to take advantage of the long-term growth

opportunities in Industrial IoT and 5G, which require both performance critical antenna solutions across multiple vertical markets and RF test equipment.”

CONFERENCE CALL / WEBCAST  

PCTEL’s management team will discuss the Company’s results today at 4:30 p.m. ET.The call can be accessed by dialing (888) 782-2072 (U.S. / Canada) or (706) 679-6397 (International), conference ID: 47850719. The call will also be webcast at http://investor.pctel.com/events.cfm.

REPLAY: A replay will be available for two weeks after the call on either the website listed above or by calling (855) 859-2056 (U.S./Canada), or International (404) 537-3406, conference ID: 47850719.

About PCTEL

PCTEL, Inc. provides Performance Critical TELecom technology solutions. We are a leading global supplier of antennas and wireless network testing solutions. Our precision antennas are deployed in small cells, enterprise Wi-Fi access points, fleet management and transit systems, and in equipment and devices for the Industrial Internet of Things (IIoT). We offer in-house design, testing, radio integration, and manufacturing capabilities for our antenna customers. PCTEL’s test and measurement tools improve the performance of wireless networks globally, with a focus on LTE, public safety, and emerging 5G technologies. Network operators, neutral hosts, and equipment manufacturers rely on our scanning receivers and testing solutions to analyze, design, and optimize their networks.

For more information, please visit our website at http://www.pctel.com/.

PCTEL Safe Harbor Statement

This press release and our related comments in our earnings conference call contain “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Specifically, the statements regarding our future financial performance, growth of our Connected Solutions and RF Solutions businesses, anticipated demand for certain products and the anticipated growth of public and private wireless systems are forward-looking statements within the meaning of the safe harbor. These statements are based on management’s current expectations and actual results may differ materially from those projected as a result of certain risks and uncertainties, including the impact of data densification and IoT on capacity and coverage demand, impact of 5G, customer demand for these types of products and services generally, growth and continuity in PCTEL’s vertical markets, and PCTEL’s ability to grow its wireless products business and create, protect and implement new technologies and solutions. These and other risks and uncertainties are detailed in PCTEL's Securities and Exchange Commission filings. These forward-looking statements are made only as of the date hereof, and PCTEL disclaims any obligation to update or revise the information contained in any forward-looking statement, whether as a result of new information, future events or otherwise.

# # #

For further information contact:

John SchoenMichael Rosenberg

CFODirector of Marketing

PCTEL, Inc.PCTEL, Inc.

(630) 372-6800(301) 444-2046

public.relations@pctel.com

PCTEL, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
	December 31,			December 31,
	2017			2016
ASSETS
Cash and cash equivalents	$	5,559		$	14,855
Short-term investment securities		32,499			18,456
Accounts receivable, net of allowance for doubtful accounts of $319 and $273 at    December 31, 2017 and December 31, 2016, respectively		18,427			19,101
Inventories, net		12,756			14,442
Prepaid expenses and other assets		1,605			1,498
Current assets held for sale		0			50
Total current assets		70,846			68,402
Property and equipment, net		12,369			11,833
Goodwill		3,332			3,332
Intangible assets, net		2,113			3,275
Deferred tax assets, net		7,734			4,512
Other noncurrent assets		72			36
Non-current assets held for sale		0			776
TOTAL ASSETS	$	96,466		$	92,166
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable	$	5,471		$	6,073
Accrued liabilities		7,284			7,177
Total current liabilities		12,755			13,250
Long-term liabilities		392			391
Total liabilities		13,147			13,641
Stockholders’ equity:
Common stock, $0.001 par value, 100,000,000 shares authorized, 17,806,792 and 17,335,122    shares issued and outstanding at December 31, 2017 and December 31, 2016, respectively		18			17
Additional paid-in capital		134,505			134,480
Accumulated deficit		(51,258	)		(55,590	)
Accumulated other comprehensive loss		54			(382	)
Total stockholders’ equity		83,319			78,525
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	96,466		$	92,166

PCTEL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except per share data)
		Three Months Ended						Year Ended
		December 31,						December 31,
		2017			2016			2017			2016
	REVENUES	$	23,301		$	23,623		$	91,437		$	85,006
	COST OF REVENUES		13,056			13,860			52,626			50,595
	GROSS PROFIT		10,245			9,763			38,811			34,411
	OPERATING EXPENSES:
	Research and development		3,002			2,577			11,142			10,158
	Sales and marketing		3,236			3,646			12,630			12,716
	General and administrative		3,028			2,873			13,110			11,905
	Amortization of intangible assets		124			124			496			531
	Restructuring expenses		0			0			0			234
	Total operating expenses		9,390			9,220			37,378			35,544
	OPERATING INCOME (LOSS)		855			543			1,433			(1,133	)
	Other income, net		32			63			105			112
	INCOME (LOSS) BEFORE INCOME TAXES		887			606			1,538			(1,021	)
	(Benefit) expense for income taxes		(2,402	)		5,173			(2,471	)		11,776
	NET INCOME (LOSS) FROM CONTINUING OPERATIONS		3,289			(4,567	)		4,009			(12,797	)
	NET LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX BENEFIT		(39	)		(760	)		(187	)		(4,884	)
	NET INCOME (LOSS)	$	3,250		$	(5,327	)	$	3,822		$	(17,681	)
	Net Income (Loss) per Share From Continuing Operations:
	Basic	$	0.19		$	(0.28	)	$	0.24		$	(0.79	)
	Diluted	$	0.19		$	(0.28	)	$	0.24		$	(0.79	)
	Net Loss per Share From Discontinued Operations:
	Basic	$	(0.00	)	$	(0.05	)	$	(0.01	)	$	(0.30	)
	Diluted	$	(0.00	)	$	(0.05	)	$	(0.01	)	$	(0.30	)
	Net Income (Loss) per Share:
	Basic	$	0.19		$	(0.33	)	$	0.23		$	(1.09	)
	Diluted	$	0.19		$	(0.33	)	$	0.23		$	(1.09	)
	Weighted Average Shares:
	Basic		16,926			16,194			16,626			16,151
	Diluted		17,299			16,194			16,913			16,151
	Cash dividend per share	$	0.055		$	0.05		$	0.210		$	0.20

PCTEL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
	Year Ended December 31,
.	2017			2016
Operating Activities:
Net income (loss) from continuing operations	$	4,009		$	(12,797	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation		2,567			2,629
Intangible asset amortization		1,162			1,198
Stock-based compensation		3,005			3,847
Loss on disposal/sale of property and equipment		18			2
Restructuring costs		(78	)		30
Deferred tax provision		(2,647	)		11,048
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		853			1,695
Inventories		1,970			2,863
Prepaid expenses and other assets		(121	)		44
Accounts payable		(1,037	)		(484	)
Income taxes payable		(199	)		81
Other accrued liabilities		182			929
Deferred revenue		85			40
Net cash provided by operating activities		9,769			11,125
Investing Activities:
Capital expenditures		(2,666	)		(1,739	)
Proceeds from disposal of property and equipment		1			15
Purchases of investments		(49,009	)		(74,264	)
Redemptions/maturities of short-term investments		34,966			80,536
Net cash (used in) provided by investing activities		(16,708	)		4,548
Financing Activities:
Proceeds from issuance of common stock		1,975			649
Payments for repurchase of common stock		0			(4,095	)
Payment of withholding tax on stock-based compensation		(1,298	)		(426	)
Principle payments on capital leases		(98	)		(51	)
Cash dividends		(3,705	)		(3,456	)
Net cash used in financing activities		(3,126	)		(7,379	)
	.
Cash flows from discontinued operations:
Net cash used in operating activities		(795	)		(242	)
Net cash provided by (used in) investing activities		1,434			(173	)
Net cash provided by (used in) discontinued operations		639			(415	)
Net (decrease) increase in cash and cash equivalents		(9,426	)		7,879
Effect of exchange rate changes on cash		130			(79	)
Cash and cash equivalents, beginning of year		14,855			7,055
Cash and Cash Equivalents, End of Period	$	5,559		$	14,855

PCTEL, INC.
P&L INFORMATION BY SEGMENT - Continuing Operations (unaudited)
(in thousands)
	Three Months Ended December 31, 2017									Year Ended December 31, 2017
	Connected Solutions		RF Solutions		Corporate			Total		Connected Solutions		RF Solutions		Corporate			Total
REVENUES	$	16,487	$	6,861	$	(47	)	$	23,301	$	68,612	$	23,019	$	(194	)	$	91,437
GROSS PROFIT		5,157		5,077		11			10,245		22,439		16,354		18			38,811
OPERATING (LOSS) INCOME	$	1,517	$	1,869	$	(2,531	)	$	855	$	8,304	$	4,177	$	(11,048	)	$	1,433
	Three Months Ended December 31, 2016									Year Ended December 31, 2016
	Connected Solutions		RF Solutions		Corporate			Total		Connected Solutions		RF Solutions		Corporate			Total
REVENUES	$	18,147	$	5,488	$	(12	)	$	23,623	$	65,763	$	19,419	$	(176	)	$	85,006
GROSS PROFIT		5,671		4,070		22			9,763		20,706		13,690		15			34,411
OPERATING (LOSS) INCOME	$	2,177	$	701	$	(2,335	)	$	543	$	7,804	$	1,042	$	(9,979	)	$	(1,133	)

Reconciliation of GAAP to non-GAAP Results - Continuing Operations (unaudited)
(in thousands except per share information)
Reconciliation of GAAP operating income (loss) to non-GAAP operating income - Continuing Operations (a)
		Three Months Ended December 31,						Year Ended December 31,
		2017			2016			2017			2016
	Operating Income (Loss)	$	855		$	543		$	1,433		$	(1,133	)
(a)	Add:
	Amortization of intangible assets
	-Cost of revenues		167			167			666			668
	-Operating expenses		124			124			496			531
	Restructuring		0			0			0			234
	TelWorx investigation:
	-General & administrative		0			0			0			4
	Stock Compensation:
	-Cost of revenues		68			63			268			282
	-Engineering		123			125			517			650
	-Sales & marketing		112			140			474			617
	-General & administrative		244			451			1,745			2,298
			838			1,070			4,166			5,284
	Non-GAAP Operating Income	$	1,693		$	1,613		$	5,599		$	4,151
	% of revenue		7.3	%		6.8	%		6.1	%		4.9	%
Reconciliation of GAAP net income (loss) to non-GAAP net (loss) income - Continuing Operations (b)
		Three Months Ended December 31,						Year Ended December 31,
		2017			2016			2017			2016
	Net Income (Loss)	$	3,289		$	(4,567	)	$	4,009		$	(12,797	)
	Adjustments:
(a)	Non-GAAP adjustment to operating income (loss)		838			1,070			4,166			5,284
(b)	Other income related to SEC investigation of TelWorx		0			0			0			(4	)
(b)	Income Taxes		(2,713	)		4,871			(3,498	)		11,009
			(1,875	)		5,941			668			16,289
	Non-GAAP Net Income	$	1,414		$	1,374		$	4,677		$	3,492
	Non-GAAP Earning per Share:
	Basic	$	0.08		$	0.08		$	0.28		$	0.22
	Diluted	$	0.08		$	0.08		$	0.28		$	0.21
	Weighed Average Shares:
	Basic		16,926			16,194			16,626			16,151
	Diluted		17,299			16,439			16,913			16,325

This schedule reconciles the Company's GAAP operating income (loss) and GAAP net income (loss) to its non-GAAP operating income and non-GAAP net income.  The Company believes that presentation of this schedule provides meaningful supplemental information to both management and investors that is indicative of the Company's core operating results and facilitates comparison of operating results across reporting periods.  The Company uses these non-GAAP measures when evaluating its financial results as well

as for internal planning and forecasting purposes.  These non-GAAP measures should not be viewed as a substitute for the Company's GAAP results.

(a) These adjustments reflect stock-based compensation expense, amortization of intangible assets, restructuring charges, and general and administrative expenses associated with the SEC investigation of TelWorx.

(b) These adjustments include the items described in footnote (a) as well as other income for insurance claims related to the SEC investigation of TelWorx, and non-cash income tax expense.

Reconciliation of GAAP to non-GAAP SEGMENT INFORMATION - Continuing Operations (unaudited) (a)
	(in thousands)
		Three Months Ended December 31, 2017									Year Ended December 31, 2017
		Connected Solutions		RF Solutions		Corporate			Total		Connected Solutions		RF Solutions		Corporate			Total
	Operating Income (Loss)	$	1,517	$	1,869	$	(2,531	)	$	855	$	8,304	$	4,177	$	(11,048	)	$	1,433
	Add:
	Amortization of intangible assets:
	-Cost of revenues		0		167		0			167		0		666		0			666
	-Operating expenses		39		85		0			124		156		340		0			496
	Stock Compensation:
	-Cost of revenues		40		28		0			68		161		107		0			268
	-Engineering		63		60		0			123		243		274		0			517
	-Sales & marketing		72		40		0			112		314		160		0			474
	-General & administrative		46		19		179			244		180		68		1,497			1,745
			260		399		179			838		1,054		1,615		1,497			4,166
	Non-GAAP Operating (Loss) Income	$	1,777	$	2,268	$	(2,352	)	$	1,693	$	9,358	$	5,792	$	(9,551	)	$	5,599
		Three Months Ended December 31, 2016									Year Ended December 31, 2016
		Connected Solutions		RF Solutions		Corporate			Total		Connected Solutions		RF Solutions		Corporate			Total
	Operating (Loss) Income	$	2,177	$	701	$	(2,335	)	$	543	$	7,804	$	1,042	$	(9,979	)	$	(1,133	)
	Add:
	Amortization of intangible assets:
	-Cost of revenues		0		167		0			167		0		668		0			668
	-Operating expenses		39		85		0			124		191		340		0			531
	Restructuring expenses		0		0		0			0		44		117		73			234
	TelWorx investigation:
	-General & administrative		0		0		0			0		0		0		4			4
	Stock Compensation:
	-Cost of revenues		43		20		0			63		178		104		0			282
	-Engineering		48		77		0			125		172		478		0			650
	-Sales & marketing		99		41		0			140		438		179		0			617
	-General & administrative		51		82		318			451		209		340		1,749			2,298
			280		472		318			1,070		1,232		2,226		1,826			5,284
	Non-GAAP Operating (Loss) Income	$	2,457	$	1,173	$	(2,017	)	$	1,613	$	9,036	$	3,268	$	(8,153	)	$	4,151

This schedule reconciles the Company's GAAP operating income (loss) by segment to its non-GAAP operating income (loss). The Company believes that presentation of this schedule provides meaningful supplemental information to both management and investors that is indicative of the Company's core operating results and facilitates comparison of operating results across reporting periods.  The Company uses these non-GAAP measures when evaluating its financial results as well as for internal planning and forecasting purposes.  These non-GAAP measures should not be viewed as a substitute for the Company's GAAP results.

(a) These adjustments reflect stock-based compensation expense, amortization of intangible assets, restructuring charges, and general and administrative expenses associated with the SEC investigation of TelWorx.

PCTEL, Inc.
Reconciliation of GAAP operating income (loss) to Adjusted EBITDA - Continuing Operations (a)
(unaudited, in thousands)
		Three Months Ended December 31,						Year Ended December 31,
		2017			2016			2017			2016
	Operating Income (Loss)	$	855		$	543		$	1,433		$	(1,133	)
(a)	Add:
	Depreciation and amortization		653			635			2,566			2,629
	Intangible amortization		291			291			1,162			1,199
	Stock compensation expenses		547			779			3,004			3,847
	Restructuring expense		0			0			0			234
	TelWorx investigation- operating expenses		0			0			0			4
	Adjusted EBITDA	$	2,346		$	2,248		$	8,165		$	6,780
	% of revenue		10.1	%		9.5	%		8.9	%		8.0	%

This schedule reconciles the Company's GAAP operating loss to Adjusted EBITDA.  The Company believes that this schedule provides meaningful supplemental information to both management and investors that is indicative of the Company's core operating results and facilitates comparison of operating results across reporting periods.  The Company uses Adjusted EBITDA when evaluating its financial results as well as for internal planning and forecasting purposes.  Adjusted EBITDA should not be viewed as a substitute for the Company's GAAP results.

(a) Adjusted EBITDA is defined as net income before interest, income taxes, depreciation and amortization.  These adjustments reflect depreciation, amortization of intangible assets, stock compensation expenses, restructuring expenses, and general and administrative expenses associated with the SEC investigation of TelWorx.